Attached files
| file | filename |
|---|---|
| EX-32.1 - RAYONT INC. | ex32-1.htm |
| EX-31.2 - RAYONT INC. | ex31-2.htm |
| EX-31.1 - RAYONT INC. | ex31-1.htm |
| EX-10.1 - RAYONT INC. | ex10-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2020
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to _________
Commission File Number: 000-56020
| RAYONT INC. |
| (Exact Name of Registrant as Specified in Its Charter) |
| Nevada | 27-5159463 | |
| (State
or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) |
Level 3,26 Marine Parade, Southport Queensland, Australia |
4215 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: +61 432 051 512
(Former name, former address and telephone number, if changed since last report)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common stock, par value $0.001 par value | RAYT | OTC Markets Group |
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [ ] | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] | Smaller reporting company | [X] |
| Emerging growth company | [X] | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer as of June 30, 2020 the last business day of the Company’s most recently completed third fiscal quarter was $484,787.24 based on the closing price of $0.07 per share, as reported on the over-the-counter bulletin board.
There were 46,606,231 shares of issuer’s Common Stock outstanding as of December 17, 2020.
TABLE OF CONTENTS
| i |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This Annual Report on Form 10-K , the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission, or SEC, and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the benefits of that act. Unless the context is otherwise, the forward-looking statements included or incorporated by reference in this Form 10-K and those reports, statements, information and announcements address activities, events or developments that Rayont Inc. (hereinafter referred to as “we,” “us,” “our,” “our Company” or “Rayont”) expects or anticipates, will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed elsewhere in this Report.
Certain risk factors could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties we currently face are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.
The industry and market data contained in this report are based either on our management’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data are subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.
| ii |
History and Overview
Rayont Inc. (formerly known as Velt International Group Inc. (“Rayont” or the “Company”) was incorporated in Nevada on February 7, 2011. Our current principal executive office is located at Level 3, 26 Marine Parade, Southport, 4215, Queensland, Australia.
On March 13, 2017, Yidan (Andy) Liu and Jun (Charlie) Huang, the principal stockholders of the Company (“Sellers”), entered into a Stock Purchase Agreement (the “Agreement”) with Chin Kha Foo, the assignee of Choa-Jung Lee, and his assigns (the “Buyers”), pursuant to which, among other things, Sellers agreed to sell to the Buyers, and the Buyers agreed to purchase from Sellers, a total of 24,000,000 shares of Common Stock of the Company of record and beneficially by Sellers (the “Purchased Shares”). The Purchased Shares represented approximately 64% of the Company’s issued and outstanding shares of Common Stock, resulting in a change of the control of the Company.
The Board of the Directors approved the reverse split of the Company’s issued and outstanding common stock whereby each twenty shares of common stock was converted into one share of common stock. The stock split became effective with the Financial Industry Regulatory Authority (“FINRA”) on May 21, 2018.
On November 19, 2018, the Company’s principal shareholder, Mr. Chin Kha Foo (“Mr. Foo”), entered into a Stock Purchase Agreement (the “SPA”) to transfer 60% of the Company’s issued and outstanding shares to Rural Asset Management Services, Inc., a Malaysian company (“RAM”). On December 14, 2018, RAM became the principal shareholder of the Company and Mr. Ali Kasa was appointed to be the Company’s President, CEO, CFO, and Secretary of the Company due to the change in control of the Company. RAM is an equity investment company with portfolio of interest in biotechnology, healthcare, cancer treatment research and technology, ICT and Crypto Currency. RAM has invested in companies located in Malaysia, Australia and the USA.
On January 22, 2019, the Company entered into an Acquisition Agreement with THF Holdings Pty Ltd., an Australian corporation (“THF”) and Rural, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of THF in exchange for 4,000,000 shares of Company’s common stock, valued on January 22, 2019 at $1,000,000. THF is an Australian Cancer treatment and medical device company. Rural was the majority shareholder of THF. In March 2019, the acquisition of THF was completed and THF became a subsidiary of the Company. In addition, the acquisition was accounted for business combination under common control of Rural.
On September 7, 2019, FINRA approved name and trading symbol change. The renaming sparked the commencement of a significant change in corporate strategy and future direction of the company.
On September 30, 2020, pursuant to an Acquisition Agreement the Company acquired all of the issued and outstanding shares of Rayont International (Labuan) Inc (“RIL”), a Malaysian Offshore company as Exclusive Licensee of a Cancer Treatment technology for Sub-Sahara African Region. Under the agreement, Rayont acquired 100% outstanding shares of RIL in exchange for 25,714,286 shares of the Company’s common stock valued at $1.8 Million based on the closing share price on the OTC Markets on September 29, 2020.
Rayont International (Labuan) Inc is an on offshore company incorporated in Labuan, Malaysia which offers attractive 3% tax on profit. The company is clinical-stage life sciences company that holds the exclusive license for registering and commercializing Photosoft technology for treatment of all cancers across Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa. The human clinical trial efforts have started in Australia and China conducted by Hudson Medical Institute, Australian.
Photosoft technology is an improved next generation Photodynamic Therapy (PDT). PDT uses non-toxic photosensitizers and visible light in combination with oxygen to produce cytotoxic-reactive oxygen that kills malignant cells, shuts down tumors and stimulates the immune system. In contrast to surgery, or radiotherapy and chemotherapy which are mostly immunosuppressive, PDT causes acute inflammation, expression of heat-shock proteins, and invasion and infiltration of a tumor by leukocytes.
Given the acquisition of THF Holdings Pty Ltd and Rayont International (Labuan) Inc as well as the cancer treatment assets that the company has invested on, Rayont has been focusing on commercializing these investments. The commercialization of the current assets for cancer treatment requires medical board approval for almost all of the countries subject to the license. Rayont has conducted the initial study to identify the requirements for obtaining the approvals for using PDT to treat cancer across different jurisdictions in Sub-Saharan Africa (“SSA”). The same PDT technology has been licensed in China, Australia and New Zealand. It is currently undergoing medical trials in Australia and China. The recent announcements show positive results that the technology works. The company believes that it will take time before it can start commercializing these assets and start to generate revenues and operating profits. In order to sustain and grow the business the company has been actively looking for new opportunities post COVID-19 pandemic.
| 1 |
On August 26, 2020, the company through its subsidiary Rayont (Australia) Pty Ltd f.k.a THF Holdings Pty Ltd incorporated Rayont Technologies Pty Ltd. COVID-19 created new opportunities for digital economy since employers globally around the world were forced to enable working from home. Rayont Technologies enables digital employee engagement by automating employee recruitment, onboarding, competency assessment and continuous learning. Rayont Technologies hired Mr. Shilow Shaffier as the Chief Executive Officer to lead the operations. Within first few months the company started generating revenues from some reputable clients within Australia.
In order to fulfill the orders and grow rapidly Rayont Technologies Pty Ltd entered an agreement on October 15, 2020 with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd for AUD 302,876.22 payable over 90 days upon Ms Smith transfers the assets to Rayont Technologies Pty Ltd. The assets that Rayont Technologies acquired under the agreement are:
1. Trademark
2. Website
3. Software
4. Office Assets
5. Customer Contracts
Full copy of the asset purchase agreement can be found in Exhibit 10.1.
Given its investments in healthcare and now technology and education, the company is focused on partnering with entrepreneurial and mid-sized companies across the world and has already acquired a significant portfolio of assets across Australia, Asia and Africa from core sectors.
| ● | Healthcare Services |
| ● | Education |
| ● | Technology |
As of September 30, 2020, the company group structure consisted of the following companies:
The company focus is to grow revenues and operating profit within next financial year and plans to acquire revenue generating companies and grow the current businesses within the sectors it focuses on.
Competitive Conditions
Given that the company has established multiple business units or divisions and the competitive conditions defer for each business unit, the company presets these conditions accordingly.
1. Healthcare Services
Cancer is emerging as a major public health problem in Sub-Saharan Africa because of population aging and growth, as well as increased prevalence of key risk factors, including those associated with social and economic transition.
According to the World Health Organization, the number of new cancer cases per year will increase by 70% in Africa between 2012 and 2030 due to demographic changes alone – faster than in any other region of the world. Furthermore, for many cancers, the risk of getting cancer and the risk of dying from cancer is nearly the same throughout the Sub-Saharan region of Africa, due mostly to the late stage of diagnosis and lack of treatment.
| 2 |
Rayont intends to establish numerous Next Generation Photo Dynamic Therapy (NGPDT) centers to facilitate the treatment of cancers, starting in Port Elizabeth, South Africa prior to rolling out the concept across the broader Sub-Saharan Africa license region which encompasses a total of 48 countries and 1.1 billion people.
2. Education & Technology
The Online Education industry has expanded over the past five years. Technological advancements and wider internet access have made the online education model an increasingly viable option for learning and career advancement. However, changes to government funding and intensifying competition have constrained revenue over the period. Industry revenue is expected to rise at an annualized 8.5% over the five years through 2019-20, to a total of $8.1 billion. This includes growth of 10.1% in the current year.
Online education provides greater flexibility compared with traditional education and enables full-time workers to engage in further learning. Many education providers have recognized the growing need for flexibility and have increased the breadth of courses available online. MOOCs have grown in popularity over the past five years, facilitating enrolments from mature-age students that are looking for professional education. A depreciating Australian dollar has boosted enrolments from international students, supporting the industry. In addition, the number of VET providers has risen over the past five years, following government intervention to allow VET students access to financial assistance.
The COVID-19 virus outbreak has encouraged operators to move courses online, to conform with government restrictions on social distancing. However, most of these courses are expected to return to the classroom in time for the second teaching semester at most Australian institutions. For classes to be included in the industry, at least 80% of the content must be delivered online. Consequently, the effect of the COVID-19 virus outbreak on the industry is expected to be minimal in the current year.
As the industry approaches saturation, population demographics and trends in employment are projected to influence future demand for online education. The national unemployment rate is forecast to rise over the next five years, driving industry revenue growth. Additionally, the number of internet connections across Australia is projected to rise, supporting industry growth. Industry revenue is anticipated to increase at an annualized 5.6% over the five years through 2024-25, to $10.7 billion.
Rayont Technologies competitors in the learning and education space will include SAP Litmos, Kineo, Walkme and Linkedin Learning. With new developments in leading technology such as AI, Gamification and AR/VR, Rayont is looking to be a leader in the corporate learning market. The Workstar assets include two learning management and employment engagement software platforms and digital content creation capabilities
Customers
1. Healthcare Services
Next Generation Photo Dynamic Therapy (NGPDT) centers have not been established and commercialized yet.
2. Education & Technology
Under the agreement dated October 15, 2020 with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd Rayont Technologies Pty Ltd acquired a number of ongoing service agreement with customers who are using the Nexus or the Sphere systems. The customer contracts include large and enterprise customers from the Banking, Hospitality, Food and Beverage and Retail markets.
Products
1. Healthcare Services
What is Photo Dynamic Therapy?
Photo Dynamic Therapy (“PDT”) is an alternative cancer treatment that requires patients to orally or intravenously consume a synthetic photosensitizing agent (i.e., a light-activated drug) to circulate through the body. As the agent passes through the insides of the patient, it will concentrate at the sight of the cancer. Next the patients will be exposed to specific wavelength delivery devices that will use light to ‘activate’ the photosensitizing agent, and through a cascade of molecular reactions, will destroy the cells and tissues exposed to the agent (i.e., the cancer).
Despite the original form of PDT (developed in the 1970’s) still being used for the treatment of some cancers today, there are limitations on its effectiveness for non-superficial cancers.
For example, some patients using PDT had trouble absorbing sufficient light for cancers that had grown deep within the skin or were metastatically spread throughout the body.
Further the earlier versions of the synthetic photosensitizing agent were not selective enough, and sometimes concentrated in areas that did not have cancer.
Synthetic photosensitizing agents tend to remain in the patient’s body for an extended amount of time. This made some patients sensitive to light as some surface-level remains of the agent were reacting with the sun.
Because of this, the treatment depth of PDT was limited to mainly surface level cancers. This shortcoming gave rise to a second generation of PDT treatment termed next generation or ‘NGPDT’, that addressed the limitations of its predecessor.
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Next-Generation Photo Dynamic Therapy (NGPDT)
The latest NGPDT treatment varies in both the photosensitizing agent, and wavelength delivery devices, and delivers a superior and safer treatment that targets primary cancers.
This next generation treatment process is:
| ● | Non-Toxic – NGPDT uses Photosoft™ a non-toxic, chlorophyll-based PDT photosensitiser, instead of a synthetic-based photosensitizing agent used in traditional PDT. Photosoft™ is a complex of chlorin and chlorophyllin, is water soluble and completely harmless to the body. | |
| ● | Minimised Photosensitivity – The chlorophyll-based agent circulates around the patient’s system and has a significantly faster clearance time (24 Hours) than the traditional synthetic PDT agent (Up to 3 months). | |
| ● | Highly Selective for Cancer Cells – The chlorophyll-based agent is better able to selectively accumulate onto metastatically spread cancers as well as developed cancers that are hard-to-detect by the immune system. The Hudson Institute of Medical Research reports the new IVX-PO2 version is 15x more effective than its predecessors. |
NGPDT Treatment Program
The treatment plan is different for every patient. Every detail is considered via professional consultation, ensuring the most suitable treatment is facilitated. Rayont’s NGPDT treatment will follow a standardized treatment protocol. that goes through three phases.
1) Preparation;
2) Treatment; and
3) Rehabilitation.
The Preparation Phase will be the initial consultation between the doctor and the patient. The doctor will closely assess the patient eligibility for NGPDT treatment, as well as provide a professional opinion on a possible treatment plan. Upon mutual consent, the patient will be able to start treatment.
The Treatment Phase is typically three consecutive rounds of NGPDT treatment, however the specifics change depending on the treatment plan produced in the Preparation Phase.
After treatment, the immune system is in a debilitated state, leaving patients vulnerable to infection or the regrowth of cancer. Rayont is looking to partner with a number of partners to facilitate the Rehabilitation Phase. For this, both will work in conjunction to recuperate the patient’s immune system, and its ability to detect and destroy abnormal cells (e.g., possible cancer regrowth).
2. Education & Technology
Under the agreement dated October 15, 2020 with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd. Rayont Technologies Pty Ltd acquired a number of established products that offer customers the following products and services:
| 1) | Custom Content Development. Rayont Technologies customers are able to develop custom content with different levels of interactivities depending on their needs. The contact is able to be uploaded or made compatible with their existing systems of can be bundled with our existing systems. | |
| 2) | End-to-end employee experience/engagement platform. The Nexus platform is a cloud-based platform that clients can manage employee experience and engagement which includes recruitment and selection, new employee onboarding, induction, competency assessment, learning management, social networking etc. | |
| 3) | Learning Management System. The Sphere Learning Management System is a cloud based digital learning solutions for businesses that want to reduce employee down time from face-to-face learning activities. The system is able to be integrated with third party content, able to upload client custom content and SCORM compliant. | |
| 4) | Content subscriptions. Workstar and Rayont Technologies Pty Ltd are in process of negotiating strategic partnership with global, regional and local content libraries to be integrated with The Nesus and The Sphere Learning Management Systems. Clients can subscribe to any content as and when they need for their employees and they pay per content they consume only. Rayont receives revenue share based on revenues generated through our customer networks. |
Marketing and Sales
In order to become competitive in the private equity space, the Company has taken steps to establish and number of digital marketing channels namely:
| 1) | Websites. This is an effective marketing and branding tool for customers, employees and investors as well as the public educations. The Company has completed its website and updates it regularly. The following are some important websites that the Company has: |
| i. | www.rayont.com | |
| ii. | www.workstar.com.au |
| 2) | Social media channels The Company has set up major social media channels such as Facebook, LinkedIn and instagram for each brand. The Company has established YouTube channels for some of the brands. These social media channels are linked and integrated with the websites. |
| 3) | Digital and analog advertising. The marketing infrastructure enables the Company and its subsidiaries to conduct both digital and analog advertising activities. |
Suppliers
Rayont International (Labuan) Ltd f.k.a Natural Health Farm Inc entered into exclusive distribution and licensing agreement with RMW Cho Group Ltd on 26th November 2018 to commercialize NGPDT technology across sub-sahara African territories. Rayont’s NGPDT licence provides exclusive use of the NGPDT throughout the entire Sub-Saharan Africa region. As depicted in the table opposite, this vast region is densely populated. According to “Worldmeter” in 2019 this region is home to move than 1.1 billion individuals which represents approximately 14.35% of the entire global population.
| 4 |
| 5 |
Government Regulations
The opening of NGPDT treatment centers requires approval from respective medical boards of each territory or country we are licensed by the licensor to operate. The approvals require either local medical trials or approval from established jurisdiction like FDA or USA or European Community. Currently medical trials are being conducted in Australia and China. The company plans to start the medical trials in South Africa first followed by other territories as soon as positive results are seen in Australia in order to minimize the financial risks associated with medical trials.
Employees
As of September 30, 2020, we have 3 employees, all of whom performed operational, technical and administrative functions. No payroll will be paid to the employees before the Company generates net profits. We believe our future success will depend to a large extent on our continued ability to attract and retain highly skilled and qualified employees. We consider our employee relations to be good. None of these employees belong to labor unions.
Under the agreement dated October 15, 2020 with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd Rayont Technologies Pty Ltd acquired 9 full time employees who have entered into new employment agreements with Rayont Technologies Pty Ltd effective of 7th of November 2020.
Not Applicable to smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not Applicable to smaller reporting companies.
Our executive office address is located at Level 3,26 Marine Parade, Southport, Queensland, Australia. The lease for this facility is free of charge since we use a shareholder’s office. We believe that our leased facilities are suitable and adequate for their intended use. The company has adopted work from home policy to comply with COVID -19 restrictions in place in Australia and other jurisdictions we operate.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market for Common Equity
Our common stock is quoted on the OTC Market Pink Sheet (“OTC PINK”) under the symbol “RAYT”. The following table sets forth the high and low bid prices for our common stock for the two most recently completed fiscal years. Such prices are based on inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
| Fiscal 2017 | Low | High | ||||||
| First Quarter | $ | 1.05 | $ | 5.00 | ||||
| Second Quarter | $ | 1.42 | $ | 2.00 | ||||
| Third Quarter | $ | 0.20 | $ | 1.42 | ||||
| Fourth Quarter | $ | 0.40 | $ | 6.00 | ||||
| Fiscal 2018 | Low | High | ||||||
| First Quarter | $ | 1.60 | $ | 6.00 | ||||
| Second Quarter | $ | 1.40 | $ | 10.40 | ||||
| Third Quarter | $ | 0.75 | $ | 4.00 | ||||
| Fourth Quarter | $ | 0.25 | $ | 1.00 | ||||
| Fiscal 2019 | Low | High | ||||||
| First Quarter | $ | 0.29 | $ | 0.34 | ||||
| Second Quarter | $ | 0.23 | $ | 0.75 | ||||
| Third Quarter | $ | 0.20 | $ | 0.51 | ||||
| Fourth Quarter | $ | 0.33 | $ | 0.50 | ||||
| Fiscal 2020 | Low | High | ||||||
| First Quarter | $ | 0.09 | $ | 0.50 | ||||
| Second Quarter | $ | 0.09 | $ | 0.51 | ||||
| Third Quarter | $ | 0.05 | $ | 0.50 | ||||
| Fourth Quarter | $ | 0.07 | $ | 0.07 | ||||
| Fiscal 2021 | Low | High | ||||||
| First Quarter through December 8, 2020 | $ | 0.07 | $ | 1.28 | ||||
Penny Stock Considerations
The trading of our common stock is deemed to be “penny stock” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus are subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $100,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:
| ● | Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt; |
| ● | Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities; |
| ● | Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and |
| ● | Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account. |
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Because of these regulations, broker-dealers may encounter difficulties in their attempt to buy or sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock in the market place. In addition, the liquidity for our common stock may be decreased, with a corresponding decrease in the price of our common stock. Our shares are likely to be subject to such penny stock rules for the foreseeable future.
Common Stock Currently Outstanding
As of December 17, 2020, 46,606,231 shares were issued and outstanding.
Holders
As of the date of this Report, we had approximately 265 stockholders of record of our common stock.
Dividends
We have not declared any cash dividends on our common stock since our inception and do not anticipate paying any dividends in the foreseeable future. We plan to retain future earnings, if any, for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.
Reports to Stockholders
We are currently subject to the information and reporting requirements of the Securities Exchange Act of 1934 and will continue to file periodic reports, and other information with the SEC. We intend to send annual reports to our stockholders containing audited financial statements.
Transfer Agent
West Coast Stock Transfer Inc. located at 721 N. Vulcan Ave. 1st FL, Encinitas, CA 92024 is the registrar and transfer agent for our common stock.
Recent Sales of Unregistered Securities
During October 12, 2020 to December 15, 2020, the Company sold 7,734,413 shares in some private placements to 135 investors for a total amount of $545,943. The Company relied upon Section 4(2) and Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.
Issuer Purchases of Equity Securities
None.
Additional Information
Copies of our annual reports on Form 10−K, quarterly reports on Form 10−Q, current reports on Form 8−K, and any amendments to those reports, are available free of charge on the Internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable to smaller reporting companies.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Annual Report contains “forward-looking statements” that describe management’s beliefs and expectations about the future. We have identified forward-looking statements by using words such as “anticipate,” “believe,” “could,” “estimate,” “may,” “expect,” and “intend,” or words of similar import. Although we believe these expectations are reasonable, our operations involve a number of risks and uncertainties and actual results may be materially different than our expectations.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-K.
| 8 |
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
Rayont Inc. (formerly Velt International Group Inc., or “Rayont” or the “Company”) is a Nevada corporation formed on February 7, 2011. The Company’s common stock are currently traded on the Over the Counter Pink Sheet under the symbol “RAYT”.
On November 19, 2018, the Company’s former principal shareholder, Mr. Chin Kha Foo, entered into a stock purchase agreement to transfer 60% of the Company’s issued and outstanding shares to Rural Asset Management Services, Inc., a Malaysian company (“Rural”). On December 14, 2018, Rural became the principal shareholder of the Company and Mr. Ali Kasa was appointed to be the Company’s President, CEO, CFO, and Secretary due to the change in control of the Company. Rural is an equity investment company with portfolio of interest in biotechnology, healthcare, cancer treatment research and technology, ICT and Crypto Currency. Rural has invested to companies located in Malaysia, Australia and the USA.
On January 22, 2019, the Company entered into an acquisition agreement with THF Holdings Pty Ltd., an Australian corporation and Rural, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of THF Holdings Pty Ltd. in exchange for 4,000,000 shares of the Company’s common stock, valued on January 22, 2019 at $1,000,000. THF Holdings Pty Ltd. is an Australian Cancer treatment and medical device company. Rural is the majority shareholder of THF Holdings Pty Ltd.. In March 2019, the acquisition of THF Holdings Pty Ltd. was completed and THF Holdings Pty Ltd. became a subsidiary of the Company. In addition, the acquisition was accounted for business combination under common control of Rural. On August 25, 2020, the name THF Holdings Pty Ltd. was changed to Rayont (Australia) Pty Ltd. (“Rayont Australia”).
On January 24, 2019, the Company entered into an acquisition agreement with THF International (Hong Kong) Ltd., a Hong Kong company (“THF Hong Kong”) and the shareholders of THF Hong Kong, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of THF Hong Kong in exchange for 8,000,000 shares of the Company’s common stock, valued at $2,000,000 on January 24, 2019. On May 13, 2019, the Company executed an amendment to the acquisition agreement, wherein the Company agreed to acquire only 85% of THF Hong Kong and reduce the purchase price to 6,800,000 shares from 8,000,000 shares. On August 4, 2019, the Company and the THF Hong Kong agreed to terminate the acquisition.
On January 24, 2019, the Company entered into an acquisition agreement with Natural Health Farm (Labuan) Inc. (“NHF”) and the shareholders of NHF, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of NHF in exchange for 40,000,000 shares of the Company’s common stock, valued at $10,000,000 on January 24, 2019. NHF is a Malaysian company concentrating on clinical life sciences and holds an exclusive license for registering and commercializing Photosoft technology for treatment of all cancers in the Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa. The human clinical trial efforts have started in Australia and China conducted by Hudson Medical Institute, Australia. On August 4, 2019, the Company and NHF agreed to terminate the acquisition.
On August 26, 2020, the Company established Rayont Technologies Pty Ltd. (Rayont Technologies) through Rayont Australia. Rayont Technologies is an Australian corporation and is engaged primarily in digital learning solutions to support the development of people skills that drive business growth.
On September 30, 2020, the Company acquired all of the issued and outstanding capital stock of Rayont International (L) Limited (Rayont International), a Malaysian company. The purchase price paid by the Company was 25,714,286 shares of its common stock valued at $1,800,000 or $0.07 per share, which was the closing price of the Company’s common stock on the OTC Markets on September 29, 2020. Rayont International is a clinical-stage life sciences company that holds the exclusive license for registering and commercializing PhotosoftTM technology for treatment of all cancers across Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa.
On October 15, 2020, Rayont Technologies Pty Ltd entered into an agreement with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd for AUD 302,876.22 payable over 90 days upon Ms Smith transfers the assets to Rayont Technologies Pty Ltd. The assets that Rayont Technologies acquired under the agreement includes trademark, website, software, office assets and customer contracts.
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Governments around the world have mandated, and continue to introduce, orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions. To date, the Company has experienced some adverse impacts; however, the impacts of COVID-19 on our operating results for the year ended September 30, 2020 was limited due to the nature of our business. The extent of the COVID-19 impact to the Company will depend on numerous factors and developments related to COVID-19. Consequently, any potential impacts of COVID-19 remain highly uncertain and cannot be predicted with confidence.
| 9 |
Current Operational Activities
Prior to the change in the control, the Company was to focus on the development and designs of a mobile application (the “Mobile App”) for a third-party company in Hong Kong. The Mobile App allows users to book airline ticket, train ticket and taxi cabs, play online games, facilitate payments for utilities and other services, and to facilitate shipping services and so forth.
With the acquisitions of Rayont Australia and Rayont International, the Company has decided to embark in life science as a sector to operate and cancer treatment as an area that it will develop its expertise and business.
Restatement
The Company has restated the consolidated financial statements as of and for the year ended September 30, 2019 contained in our previously filed Annual Reports on Form 10-K. The restatement was due to due to a material error discovered by the Company in accounting for stock-based compensations to outside consultants. The Company has not amended its previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for the periods affected by the restatement. The Company has adjusted the error by revising the consolidated financial statements as of and for the year ended September 30, 2019 included in Item 8. Financial Statements and Supplementary Data.
Results of Operations
For the fiscal years ended September 30, 2020 and 2019
Revenue
There were $186,663 and nil revenue generated for the years ended September 30, 2020 and 2019, respectively. The increase was attributable to revenue generated from digital learning solutions provided by Rayont Technologies. The Company continues looking for other opportunities which could potentially increase the profits of the Company.
Cost of Goods Sold
There was no cost of goods sold incurred for the years ended September 30, 2020 and 2019.
Operating Expense
Our operating expenses consist of selling, general and administrative expenses and depreciation expense.
For the years ended September 30, 2020 and 2019, there were a total of $425,525 and $2,306,678 operating expenses, respectively. The decrease in the operating expense was primarily resulted from that the share-based compensation granted to the Company’s officer and consultants in 2019.
| 10 |
Net Loss
We incurred net losses of $229,445 and $2,302,463 for the years ended September 30, 2020 and 2019, respectively.
Equity and Capital Resources
We have incurred losses for the year ended September 30, 2020 and had an accumulated deficit of $3,775,620 as of September 30, 2020. As of September 30, 2020, we had cash of $2,811 and a negative working capital of $1,922,046, compared to cash of $836 and a negative working capital of $1,461 as of September 30, 2019. The increase in the negative working capital was primarily because the Company had loans from related parties.
We had no material commitments for capital expenditures as of September 30, 2020. We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of potential business opportunities. However, we do not anticipate that the Company will generate revenue sufficient to cover its planned operating expenses in the foreseeable future, and we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adversely effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this Form 10-K, we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may not be available in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases or debt would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
Off-Balance Sheet Arrangements
Under SEC regulations, we are required to disclose off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:
| ● | Any obligation under certain guarantee contracts, | |
| ● | Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets, | |
| ● | Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, and | |
| ● | Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us. |
We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable to smaller reporting companies.
| 11 |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
RAYONT INC. AND Subsidiaries
Consolidated Financial Statements
As of September 30, 2020 and 2019
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Rayont Inc.
Level 3, 26 Marine Parade, Southport
Queensland, Australia
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Rayont Inc. (the ‘Company’) as of September 30, 2020 and 2019, and the related statements of income, stockholders’ equity, and cash flows for the year ended of September 30, 2020 and 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations and its cash flows for the year ended September 30, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, for the year ended September 30, 2020 and 2019 the Company incurred a net loss and has an accumulated deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| /s/ JP CENTURION & PARTNERS PLT | |
| JP CENTURION & PARTNERS PLT | |
| We have served as the Company’s auditor since 2020. | |
| Kuala Lumpur, Malaysia | |
| December 18, 2020 |
| F-2 |
RAYONT INC. AND Subsidiaries
| September 30, | ||||||||
| 2020 | 2019 | |||||||
(Restated) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2,811 | $ | 836 | ||||
| Accounts receivable | 216,525 | - | ||||||
| Loan receivable owed by a related party | 184,823 | 93,000 | ||||||
| Other receivables | 10,897 | 5,500 | ||||||
| Total Current Assets | 415,056 | 99,336 | ||||||
| Loan receivable owed by a related party | - | 191,360 | ||||||
| Property and equipment, net | 844,544 | 899,142 | ||||||
| Intangible assets, net | 2,000,000 | - | ||||||
| Other assets | 21 | 114 | ||||||
| TOTAL ASSETS | $ | 3,259,621 | $ | 1,189,952 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Due to related parties | $ | 2,152,558 | $ | 87,136 | ||||
| Note payable | 143,755 | - | ||||||
| Accrued expenses | 40,789 | 13,661 | ||||||
| Total Current Liabilities | 2,337,102 | 100,797 | ||||||
| Note payable | - | 103,000 | ||||||
| TOTAL LIABILITIES | 2,337,102 | 203,797 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $0.001 par value; 500,000,000 shares authorized; 38,871,818 and 12,907,532 shares issued and outstanding as of September 30, 2020 and 2019 | 38,872 | 12,908 | ||||||
| Preferred stock, $0.001 par value; 20,000,000 shares authorized; nil share issued and outstanding as of September 30, 2020 and 2019 | - | - | ||||||
| Additional paid-in capital | 4,677,704 | 4,574,213 | ||||||
| Accumulated deficit | (3,775,620 | ) | (3,546,175 | ) | ||||
| Accumulated other comprehensive loss | (18,437 | ) | (54,791 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 922,519 | 986,155 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,259,621 | $ | 1,189,952 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
RAYONT INC. AND S Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Years Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| (Restated) | ||||||||
| Revenues | $ | 186,663 | $ | - | ||||
| Cost of goods sold | - | - | ||||||
| Gross profit | 186,663 | - | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | 323,932 | 2,201,693 | ||||||
| Depreciation expense | 101,593 | 104,985 | ||||||
| Total operating expenses | 425,525 | 2,306,678 | ||||||
| Operating loss | (238,862 | ) | (2,306,678 | ) | ||||
| Other income (expense): | ||||||||
| Interest income | 10,152 | - | ||||||
| Interest expense | (4,120 | ) | - | |||||
| Other income (expense), net | 3,385 | 4,215 | ||||||
| Total other income (expense), net | 9,417 | 4,215 | ||||||
| Loss before income taxes | (229,445 | ) | (2,302,463 | ) | ||||
| Income tax expense | - | - | ||||||
| Net loss | (229,445 | ) | (2,302,463 | ) | ||||
| Other comprehensive loss, net of tax: | ||||||||
| Foreign currency translation adjustments | 36,354 | (54,791 | ) | |||||
| Other comprehensive income (loss) | 36,354 | (54,791 | ) | |||||
| Comprehensive loss | $ | (193,091 | ) | $ | (2,357,254 | ) | ||
| Weighted average shares outstanding, basic and diluted | 13,026,710 | 8,858,167 | ||||||
| Net loss per common share, basic and diluted | $ | (0.02 | ) | $ | (0.26 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
RAYONT INC. AND Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Total | |||||||||||||||||||
| Balance as of September 30, 2018 | 1,886,622 | $ | 1,887 | $ | 1,020,563 | $ | (1,243,712 | ) | $ | - | $ | (221,262 | ) | |||||||||||
| Issuance of common stock | 120,910 | 121 | 27,379 | - | - | 27,500 | ||||||||||||||||||
| Issuance of common stock for services | 6,900,000 | 6,900 | 1,946,100 | - | - | 1,953,000 | ||||||||||||||||||
| Business acquisition of a subsidiary under common control | 4,000,000 | 4,000 | 1,359,241 | - | - | 1,363,241 | ||||||||||||||||||
| Net loss | - | - | - | (2,302,463 | ) | - | (2,302,463 | ) | ||||||||||||||||
| Foreign currency translation loss | - | - | - | - | (54,791 | ) | (54,791 | ) | ||||||||||||||||
| Debt forgiveness | - | - | 220,930 | - | - | 220,930 | ||||||||||||||||||
| Balance as of September 30, 2019 (Restated) | 12,907,532 | 12,908 | 4,574,213 | (3,546,175 | ) | (54,791 | ) | 986,155 | ||||||||||||||||
| Issuance of common stock for services | 250,000 | 250 | 19,750 | - | - | 20,000 | ||||||||||||||||||
| Business acquisition of a subsidiary under common control | 25,714,286 | 25,714 | 48,670 | - | - | 74,384 | ||||||||||||||||||
| Net loss | (229,445 | ) | - | (229,445 | ) | |||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | 36,354 | 36,354 | ||||||||||||||||||
| Debt forgiveness | - | - | 35,071 | - | - | 35,071 | ||||||||||||||||||
| Balance as of September 30, 2020 | 38,871,818 | $ | 38,872 | $ | 4,677,704 | $ | (3,775,620 | ) | $ | (18,437 | ) | $ | 922,519 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
RAYONT INC. AND Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| (Restated) | ||||||||
| Operating Activities: | ||||||||
| Net loss | $ | (229,445 | ) | $ | (2,302,463 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Non-cash portion of share-based consulting fee expense | 20,000 | 1,953,000 | ||||||
| Depreciation expense | 101,591 | 104,985 | ||||||
| Bad debt expense | 195,491 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (205,329 | ) | - | |||||
| Other receivables | (5,358 | ) | 99,087 | |||||
| Other assets | 95 | - | ||||||
| Accrued expenses | 25,387 | 6,794 | ||||||
| Net cash used in operating activities | (97,568 | ) | (138,597 | ) | ||||
| Investing Activities: | ||||||||
| Cash from acquisition | 1,082 | 35,316 | ||||||
| Disbursements for loans receivable | (4,054 | ) | (93,000 | ) | ||||
| Net cash used in investing activities | (2,972 | ) | (57,684 | ) | ||||
| Financing Activities: | ||||||||
| Loans from related parties | 78,421 | 83,762 | ||||||
| Repayment of loans from related parties | (1,220 | ) | (19,689 | ) | ||||
| Proceeds from note payable | 136,322 | 103,000 | ||||||
| Repayment of note payable | (103,000 | ) | - | |||||
| Issuance of common stock | - | 27,500 | ||||||
| Net cash provided by financing activities | 110,523 | 194,573 | ||||||
| EFFECT OF EXCHANGE RATE ON CASH | (8,008 | ) | 2,417 | |||||
| Net increase in cash | 1,975 | 709 | ||||||
| Cash at beginning of the period | 836 | 127 | ||||||
| Cash at end of the period | $ | 2,811 | $ | 836 | ||||
| SUPPLEMENTAL DISCLOSURE: | ||||||||
| Interest paid | $ | 4,120 | $ | - | ||||
| Income tax paid | $ | - | $ | - | ||||
| SUPPLEMENTAL DISCLOSURE FOR NONCASH INVESTING AND FINANCING ACITIVIES: | ||||||||
| Issuance of common stock for services | $ | 20,000 | $ | 1,953,000 | ||||
| Issuance of common stock for acquisition | $ | 1,800,000 | $ | - | ||||
| Forgiveness of debts | $ | 35,071 | $ | 220,930 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
RAYONT INC. AND Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION
Rayont Inc. (formerly Velt International Group Inc., or “Rayont” or the “Company”) is a Nevada corporation formed on February 7, 2011. The Company currently focuses in the areas of biotechnology and internet of things (IOT).
Given the acquisition of THF Holdings Pty Ltd and Rayont International (Labuan) Inc as well as the cancer treatment assets that the Company has invested on, Rayont has been focusing on commercializing these investments. The commercialization of the current assets for cancer treatment requires medical board approval for almost all of the countries subject to the license. Rayont has conducted the initial study to identify the requirements for obtaining the approvals for using PDT to treat cancer across different jurisdictions in Sub-Saharan Africa (“SSA”). The same PDT technology has been licensed in China, Australia and New Zealand. It is currently undergoing medical trials in Australia and China. The recent announcements show positive results that the technology works. The Company believes that it will take time before it can start commercializing these assets and start to generate revenues and operating profits. In order to sustain and grow the business the company has been actively looking for new opportunities post COVID-19 pandemic.
On August 26, 2020, the Company established Rayont Technologies Pty Ltd. (Rayont Technologies) through Rayont Australia. Rayont Technologies is an Australian corporation and IOT providing services such as end-to-end employee engagement and experience platform for businesses in Australia and globally.
Rayont Technologies Pty Ltd entered an agreement on October 15, 2020 with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd for AUD 302,876.22 payable over 90 days upon Ms Smith transfers the assets to Rayont Technologies Pty Ltd.
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Governments around the world have mandated, and continue to introduce, orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions. To date, the Company has experienced some adverse impacts; however, the impacts of COVID-19 on our operating results for the year ended September 30, 2020 was limited due to the nature of our business. The extent of the COVID-19 impact to the Company will depend on numerous factors and developments related to COVID-19. Consequently, any potential impacts of COVID-19 remain highly uncertain and cannot be predicted with confidence.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant inter-company balances and transactions have been eliminated on consolidation.
| F-7 |
Use of Estimates
The preparation of our consolidated financial statements and accompanying notes in conformity with GAAP requires us to make certain estimates and assumptions. Actual results could differ from those estimates.
Going Concern
The Company had a net loss of $229,445 and a net current liability of $1,922,046 for the year ended on September 30, 2020. The accumulated loss of the Company is $2,735,873 as of September 30, 2020. The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern. These adverse conditions are negative financial trends, specifically negative working capital, recurring operating losses, accumulated deficit and other adverse key financial ratios.
The Company did not generate revenues to cover its operating expense during the year ended September 30, 2019. The Company plans to continue obtaining funding from the majority shareholder and the President of the Company to support the Company’s normal business operating. There is no assurance, however, that the Company will be successful in raising the needed capital and, if funding is available, that it will be available on terms acceptable to the Company.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
Concentration of Risk
The Company maintains its cash in bank accounts which, at times, may exceed the federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash in bank.
There is one customer who accounted for 10% or more of the Company’s sales and accounts receivable for the year ended September 30, 2020 and as of September 30, 2019, respectively. For the year ended September 30, 2019, the Company did not generate any revenue.
There is no supplier who accounted for 10% or more of the Company’s cost of sales for the years ended September 30, 2020 and 2019.
Fair Value of Financial Instruments
The carrying amounts of the Company’s current financial assets and liabilities approximated their fair values due to the short maturities. The fair value of noncurrent financial assets and liabilities are determined based on the value of the discounted cash flows. The Company believes no material difference exists between the fair value and carry amounts of the noncurrent financial assets and liabilities
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of September 30, 2020 and 2019, the Company had cash in bank of $2,811 and $836, respectively.
Intangible assets
Intangible assets for purchased are recognized and measured at cost upon acquisition and consist of the Company’s exclusive license with an indefinite useful life. The Company has determined that there are currently no legal, regulatory, contractual, economic or other factors that limit the useful life of the license and accordingly treat the license as indefinite life intangible assets.
As of September 30, 2020 and September 30, 2019, the Company had intangible assets of $2,000,000 associated with Rayont International’s exclusive license for registering and commercializing PhotosoftTM technology for treatment of all cancers across Sub-Sahara African region. The technology has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa.
Property and equipment
Property and equipment are carried at cost and, less accumulated depreciation. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposal. The Company examines the possibility of decreases in the value of property and equipment when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
The Company’s property and equipment mainly consists of computer and laser equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 5-12 years.
Impairment of Long-lived Assets
The Company reviews long-lived assets when changes in circumstances or event could impact the recoverability of the carrying value of the assets. Recoverability of long-lived assets is determined by comparing the estimated undiscounted cash flows related to the long-lived assets to their carrying value. Impairment is determined by comparing the present value of future undiscounted cash flows, or some other fair value measure, to the carrying value of the asset. For the years ended September 30, 2020 and 2019, no impairment of long-lived assets was indicated, and no impairment loss was recorded.
| F-8 |
Revenue Recognition
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products and services. We enter into contracts that include products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers.
The Company’s contracts with customers may include multiple performance obligations. Revenue relating to agreements that provide more than one performance obligation is recognized based upon the relative fair value to the customer of each performance obligation as each obligation is earned. The Company derives its revenues the follows:
Mobile Apps:
Revenue from the mobile apps is recognized when control has transferred to the customer which typically occurs when the mobile apps either upon delivery of the key code to the customer or upon the deployment of the mobile app to the App Store.
Digital Learning Solutions:
Revenue from digital learning solutions is recognized when control has transferred to the customer which typically occurs when the service is completed or the delivery of the license to the customer.
Maintenance Services:
The Company offers maintenance and function improvements services related to the mobile apps for customers. Maintenance service is considered distinct and is recognized ratably over the maintenance term.
| F-9 |
(Loss) Earnings Per Share
Basic earnings per share is computed by dividing net income (loss) attribute to stockholders of common stock by the weighted-average number of common shares outstanding for the period. Diluted net earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus equivalent shares.
Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through convertible notes and preferred stock when the effect would be dilutive. The Company only issued common stock and does not have any potentially dilutive instrument as of September 30, 2020 and 2019.
Translation of Foreign Currency
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company maintains its books and record in a local currency, Australian Dollars (“AUD”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.
Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective years:
| As of and for the year ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Year-end AUD : US$1 exchange rate | 0.7141 | 0.7009 | ||||||
| Yearly average AUD : US$1 exchange rate | 0.6772 | 0.7032 | ||||||
Recent Accounting Pronouncements
Management believes none of the recently issued accounting pronouncements will have a material impact on the consolidated financial statements.
NOTE 3 – PROPERTY AND EQUIPMENT, NET
As of September 30, 2020 and 2019, property and equipment consisted of the following:
| September 30, | ||||||||
| 2020 | 2019 | |||||||
| Laser equipment | $ | 1,240,422 | $ | 1,171,725 | ||||
| Computer equipment | 7,378 | 7,378 | ||||||
| Total | 1,247,800 | 1,179,103 | ||||||
| Less: accumulated depreciation | (403,256 | ) | (279,961 | ) | ||||
| Total property and equipment, net | $ | 844,544 | $ | 899,142 | ||||
During the year ended September 30, 2020 and 2019, the depreciation expenses were $101,591 and $104,985, respectively.
| F-10 |
NOTE 4 – NOTE PAYABLE
| September 30, | ||||||||
| 2020 | 2019 | |||||||
| 8% convertible note payable | $ | - | $ | 103,000 | ||||
| Noninterest-bearing notes payable | 143,755 | - | ||||||
| Total | $ | 143,755 | $ | 103,000 | ||||
| Notes payable - current | $ | 143,755 | $ | - | ||||
| Notes payable - noncurrent | $ | - | $ | 103,000 | ||||
8% convertible note payable
On August 12, 2019, the Company executed a securities purchase agreement with Power Up Lending Group Ltd. (the “Holder”). Pursuant to the agreement, the Holder purchased a convertible note (the “Note”) from the Company in the aggregate principal amount of $103,000. The Note bears interest at the rate of 8% per annum and the maturity date is February 12, 2021. The amount under the Note may be converted into common stock , $0.001 par value per share, by the Holder at any time during the period beginning on the date which is 180 days following the date of this Note and ending on the later on the later of the maturity date and the date of payment of the default amount. On February 7, 2020, the Company repaid the principal amount of $103,000 and accrued interest of $4,120.
For the years ended September 30, 2020, the interest expenses were $4,120 and nil, respectively.
Noninterest-bearing notes payable
In March 2020, the Company’s subsidiary entered into several loan agreements with outside creditors for the purpose to support its operation. The loans bear no interest and are due on December 31, 2020. As of September 30, 2020, the Company had outstanding balances of $143,755 to the outside third party1.
NOTE 5 – STOCK-BASED COMPENSATION
The Company accounts for stock issued for services using the fair value method in accordance with ASC 718, Stock-Based Compensation, the measurement date of shares issued for services is the grant date.
On December 19, 2018, the Company issued 3,000,000 shares of its common stock to a consultant for services rendered to the Company at $0.32 per share.
On January 14, 2019, under the Company’s 2019 Equity Incentive Plan, the Company issued an aggregate of 900,000 shares to a consultant for services rendered to the Company $0.26 per share.
On January 30, 2019, the Company issued 200,000 shares of its common stock to a consultant for services rendered to the Company at $0.26 per share.
On January 30, 2019, the Company issued 300,000 shares of its common stock to a consultant for services rendered to the Company at $0.26 per share.
On January 31, 2019, the Company issued 150,000 shares of its common stock to a consultant for services rendered to the Company at $0.26 per share.
On January 31, 2019, the Company issued 250,000 shares of its common stock to a marketing staff for marketing services rendered to the Company at $0.26 per share.
On February 11, 2019, the Board of Directors authorized the issuance of 1,000,000 shares of the Company’s common stock to its prior President, for services rendered at $0.25 per share.
On April 8, 2019, the Company issued 200,000 shares of its common stock to one consultant for services rendered to the Company at $0.25 per share.
On April 26, 2019, the Company issued 900,000 shares of its common stock to one consultant for services rendered to the Company at $0.25 per share.
On April 8, 2020, under the Company’s 2019 Equity Incentive Plan, the Company issued an aggregate of 250,000 shares of its common stock to one former officer, the CEO of the Company and one consultant for services rendered to the Company at 0.08 per shares. The Company recorded the compensation cost of $20,000 for the year ended September 30, 2020. The Company relied upon Section 4(2) and Regulation D of the Securities Act of 1933, as amended, for the issuances of the securities listed above. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.
| F-11 |
NOTE 6 - INCOME TAXES
The Company provides for income taxes under the asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company is subject to taxation in the United States and in Malaysia The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the period presented is offset by a valuation allowance. For the years ended September 30, 2020 and 2019, the Company has incurred a net loss of approximately $76 thousand and $2,080 thousand in the United States, respectively. The net operating losses generated in tax years prior to December 31, 2017, can be carryforward for twenty years, whereas the net operating losses generated after December 31, 2017 can be carryforward indefinitely. For the year ended September 30, 2020 and 2019, the Company’s subsidiary in Malaysia has incurred a net loss of approximately $25 thousand and $14 thousand, respectively. The net operating losses generated in tax years can be carryforward for seven years. Management determined that it was unlikely that the Company’s deferred tax assets would be realized and have provided for a full valuation allowance associated with the net deferred tax assets.
| Years ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Deferred tax asset, generated from net operating loss | $ | 504,499 | $ | 482,384 | ||||
| Valuation allowance | (504,499 | ) | (482,384 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
NOTE 7 - RELATED PARTY TRANSACTIONS
The related parties of the Company with whom transactions are reported in the consolidated financial statements are as follows:
| Name | Relationship | |
| Anvia Holdings Corporation (“Anvia”) | The President and CEO of Anvia is the shareholder of the Company | |
| Rural Asset Management Services, Inc. (“Rural”) | Entity under the same beneficial owner | |
| Natural Health & Education Pty Ltd (“NHE”) | Entity under the same beneficial owner | |
| THF International HK Ltd. (“THF HK”) | Entity under the same beneficial owner |
Loans receivable owed by related parties
On August 20, 2019, the Company agreed to grant a loan to Anvia for the amount of $93,000. The loan bears an interest rate at 8% and matures on February 19, 2020 and the loan was further extended to August 18, 2020 on February 16, 2020. On October 26, 2020, the Company and Anvia entered into the First Amendment to the loan agreement and agreed to extend the date of repayment to be August 18, 2020. Due to the short maturity of the loan, the Company had a current loans receivable of $93,000 and $93,000 as of September 30, 2020 and 2019, respectively. The Company recorded interest income of $10,152 and nil for the years ended September 30, 2020 and 2019.
As of September 30, 2020 and, 2019, Rayont International had loans receivable of $91,823 and nil from Rural. The loans receivable were non-interest bearing and due upon request.
As of September 30, 2019, the Company had a noncurrent loan receivable of $191,360 from the Company’s affiliate company, HCC Century City. The amount owed by HCC Century City bears no interest and unsecured. The Company was not able to collect the amount, and the total amount of the loan receivable were written off in December 2019.
Amounts due to related parties
As of September 30, 2020 and 2019, the Company had amount due to related parties as follows:
| September 30, | ||||||||
| 2020 | 2019 | |||||||
| Due to NHE | $ | 1,846,990 | $ | - | ||||
| Due to THF HK | 200,000 | - | ||||||
| Due to Rural | 79,942 | 79,942 | ||||||
| Others | 25,626 | 7,194 | ||||||
| Total | $ | 2,152,558 | $ | 87,136 | ||||
Amounts due to related parties were non-interest bearing and payable on demand. The amounts were used to support its operation and to acquire the exclusive license for registering and commercializing PhotosoftTM technology.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company has no commitment or contingency as of September 30, 2020.
NOTE 9 - SUBSEQUENT EVENTS
On October 15, 2020, Rayont Technologies Pty Ltd entered into an agreement with Ms. Kayla Ranee Smith to purchase the assets of Workstar Tech (Aust) Pty Ltd for AUD 302,876.22 payable over 90 days upon Ms Smith transfers the assets to Rayont Technologies Pty Ltd. The assets that Rayont Technologies acquired under the agreement includes trademark, website, software, office assets and customer contracts.
During October 12, 2020 to December 15, 2020, the Company sold 7,734,413 shares in some private placements to 135 investors for a total amount of $545,943. The Company relied upon Section 4(2) and Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.
NOTE 10 – RESTATEMENT OF PRIOR ISSUED FINANCIAL STATEMENTS
The consolidated financial statements as of and for the year ended September 30, 2019 have been restated due to a material error in accounting for stock-based compensations to outside consultants. The Company did not properly record consulting expense for the compensations granted by the Company. In accordance with ASC 250, Accounting Changes and Error Correction, the Company evaluated the materiality of the error from quantitative and qualitative perspectives and concluded that the error, as described above, were material to the Company’s previously issued audited consolidated financial statements as of and for the years ended September 30, 2019. The Company has not amended its previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for the periods affected by the restatement and has adjusted the error by revising the consolidated financial statements as of and for the year ended September 30, 2019 included herein.
The restatement for the consolidated financial statements as of and for the year ended September 30, 2019:
| Year Ended September 30, 2019 | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Statement of Operations Data: | ||||||||||||
| Selling general and administrative expenses | $ | 1,154,693 | $ | 1,047,000 | $ | 2,201,693 | ||||||
| Total operating expenses | 1,259,678 | 1,047,000 | 2,306,678 | |||||||||
| Net loss | (1,262,716 | ) | (1,039,747 | ) | (2,302,463 | ) | ||||||
| Year Ended September 30, 2019 | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Balance Sheet Data: | ||||||||||||
| Additional paid-in capital | $ | 3,534,446 | $ | 1,039,767 | $ | 4,574,213 | ||||||
| Accumulated deficit | (2,506,428 | ) | (1,039,747 | ) | (3,546,175 | ) | ||||||
| Year Ended September 30, 2019 | ||||||||||||
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Cash Flows data: | ||||||||||||
| Net loss | $ | (1,262,716 | ) | $ | (1,039,747 | ) | $ | (2,302,463 | ) | |||
| Non-cash portion of share-based consulting fee expense | 841,000 | 1,112,000 | 1,953,000 | |||||||||
| Net cash used in operating activities | (210,850 | ) | 72,253 | (138,597 | ) | |||||||
| Loans from related parties | - | 83,762 | 83,762 | |||||||||
| Repayment of loans from related parties | (156,857 | ) | 137,168 | (19,689 | ) | |||||||
| Issuance of common stock | 320,682 | (293,182 | ) | 27,500 | ||||||||
| Net cash provided by financing activities | 266,825 | (72,252 | ) | 194,573 | ||||||||
| F-12 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls are also designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer, in order to allow timely consideration regarding required disclosures.
The evaluation of our disclosure controls by our principal executive officer included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Annual Report. Our management, including our Chief Executive Officer, does not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were significant deficiency in our internal controls over Financial reporting as of September 30, 2020 and they were therefore not as effective as they could be to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The significant deficiency in our controls and procedure were lack of formal documents such as invoices and lack of evidence for proper approval and review of disbursements. Management does not believe that any of these significant deficiency materially affected the results and accuracy of its financial statements. However, in view of this discovery of such weaknesses, management has begun a review to improve them.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework that was issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of the year ended September 30, 2020. We believe that internal controls over financial reporting as set forth above shows some weaknesses and are not effective. We have identified certain weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
Subsequent to the end of the period covered by this report, and in light of the weakness described above, management is in the process of designing and implementing improvements in its internal control over financial reporting and we currently plan tom hire an independent third party consultant to assist in identifying and determining the appropriate accounting procedures and controls to implement.
None
| 12 |
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table contains the name, age of our Directors and executive officers as of September 30, 2018.
| Name | Age | Position Held | Held Office Since | |||
| Marshini Thulkanam | 44 | President/CEO/CFO/Secretary and Director | 2020 |
The directors will serve until the next annual meeting of stockholders of the Company and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. The following is information concerning the business background of Ms. Thulkanam.
Ms. Thulkanam has over 20 years in public practice, as well as the commercial environment. She provides accounting, CFO on demand and tax solutions to her variety of clients from diverse industries, including hospitability, retail, health, professional services, property developments, and medical centres and construction companies. Ms. Thulkanam graduated from Massey University, New Zealand and has worked in both New Zealand and Australian Chartered Accounting Firms. She is a member of the Chartered Accountants Australian and New Zealand and a Registered Tax Agent. Her focus is family businesses from start up to complex entities and takes great pride in assisting her clients navigate through Australia’s complex tax systems to provide great outcomes. Ms. Thulkanam is the founder and Managing Director of Accounting Biz Solutions Pty Ltd, an accounting and bookkeeping practice in Queensland, Australia. She is the CFO on demand for a number of private funds such as Future Asset Management International Ltd and Zenio Capital Ltd.
ITEM 11. EXECUTIVE COMPENSATION.
The compensation programs presently in effect with respect to the Chief Executive Officer, Chief Financial Officer and Chairman of the Board were established by the Board of Directors.
Executive Compensation
The following table sets forth the compensation paid to each of our principal executive officers (the “Named Executive Officers”) during the last two completed fiscal years:
SUMMARY COMPENSATION TABLE
Management Compensation
Name and Fiscal Years
Ended 2018 and 2020 | Fees
earned
or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | |||||||||||||||||||||
Marshini Thulkanam (1)FY 2020 | 0 | 8,000 | 0 | 0 | 0 | 0 | 8,000 | |||||||||||||||||||||
| Gregory Jackson FY 2020 (2) | 0 | 4,000 | 0 | 0 | 0 | 0 | 4,000 | |||||||||||||||||||||
| Gregory Jackson FY 2019 (2) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Chin Kha Foo(3) FY 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| FY 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| (1) | Ms. Thulkanam was appointed a Director, CEO, President, CFO and Secretary on March 31, 2020 |
| (2) | Mr. Jackson was appointed a Director, CEO, President, CFO and Secretary on August 9, 2019 and resigned on March 31, 2020. |
| (3) | Mr. Foo was appointed a Director and President/CEO/CFO on July 2, 2017 and resigned on August 9, 2019 |
Compensation of Directors
Each Director that is not an officer is reimbursed the reasonable out-of-pocket expenses in connection with their travel to attend meetings of the Board of Directors. No payments were made to our current directors for the fiscal years ended 2020, 2019 and 2018.
| 13 |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of the Record Date with respect to the beneficial ownership of Common Stock by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock after the Closing Date (ii) our current directors, (iii) each person who will become a director on or after the tenth day following our mailing of this Information Statement, (iv) each of newly named executive officers and (v) all of our newly named executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated by footnote and subject to community property laws, where applicable, to our knowledge the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock that are shown as beneficially owned by them. In computing the number of shares of Common Stock owned by a person and the percentage ownership of that person, any such shares subject to options and warrants held by that person that are exercisable as of the Record Date or that will become exercisable within 60 days thereafter are deemed outstanding for purposes of that person’s percentage ownership but not deemed outstanding for purposes of computing the percentage ownership of any other person. The percent of class is based on 46,606,231 shares of common stock issued and outstanding as of December 17, 2020. Unless otherwise indicated, the mailing address of each officer and director is c/o Rayont Inc., Level 3, 26 Marine Parade, Southport, Queensland, Australia 4215.
| Officers and Directors | Shares of Common stock | Percentage | ||||||
| Marshini Thulkanam | 100,000 | -0- | % | |||||
| All Officers and Directors as a Group (1) | 100,000 | -0- | % | |||||
| More than 5% Beneficial Owners: | ||||||||
| Rural Asset Management Services, Inc. | 5,132,000 | 11.01 | % | |||||
| Anvia Holdings Corporation | 3,000,000 | 6.44 | % | |||||
| Taleo Holdings (L) LTD | 25,714,286 | 55.17 | % | |||||
Legal Proceedings
The Company is not aware of any legal proceedings in which any director, officer, or any owner of record or beneficial owner of more than 5% of any class of voting securities of the Company, or any affiliate of any such director, officer, affiliate of the Company, or security holder, or any person who will become a director upon completion of the transactions contemplated by the Agreement is a party, or any information that any such person is adverse to the Company or has a material interest adverse to the Company.
CORPORATE GOVERNANCE
The Board of Directors
As set forth in our Articles of Incorporation and Bylaws, all directors of the Company hold office until the next annual meeting of stockholders or until their successors have been duly elected and qualified. Other than as disclosed in this Information Statement, to the knowledge of the Company, are no agreements with respect to the election of directors. The Company’s executive officers serve at the discretion of the Board.
Code of Ethics
We have not adopted a written Code of Ethics at this time that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Board of Directors are reviewing the necessity of adopting such a document given we are still in the start-up exploration stage and have limited employees, officers and directors.
Nominating Committee
We do not have a Nominating Committee. Since our formation we have relied upon the personal relationships of our President to attract individuals to our Board of Directors.
| 14 |
We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.
Compensation Committee
We do not have a Compensation Committee. Our entire Board of Directors review and recommend the salaries, and benefits of all employees, consultants, directors and other individuals compensated by us.
Audit Committee
We do not have a standing Audit Committee. The functions of the Audit Committee are currently assumed by our Board of Directors.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The related parties of the Company with whom transactions are reported in the consolidated financial statements are as follows:
| Name | Relationship | |
| Rural Asset Management Services, Inc. (“Rural”) | Entity under the same beneficial owner | |
| Natural Health & Education Pty Ltd (“NHE”) | Entity under the same beneficial owner | |
| THF International HK Ltd. (“THF HK”) | Entity under the same beneficial owner |
Loans receivable owed by related parties
On August 20, 2019, the Company agreed to grant a loan to Anvia Holdings Corporation (“Anvia”) for the amount of $93,000. The President and CEO of Anvia is also the shareholder of the Company and the director of THF Holdings Pty Ltd. The loan bears an interest rate at 8% and matures on February 19, 2020 and the loan was further extended to August 18, 2020 on February 16, 2020. Due to the short maturity of the loan, the Company had a current loans receivable of $93,000 and $93,000 as of September 30, 2020 and 2019, respectively.
As of September 30, 2020 and, 2019, Rayont International had loans receivable of $91,823 and nil from Rural. The loans receivable were non-interest bearing and due upon request.
As of September 30, 2019, the Company had a noncurrent loan receivable of $191,360 from the Company’s affiliate company, HCC Century City. The amount owed by HCC Century City bears no interest and unsecured. The Company was not able to collect the amount, and the total amount of the loan receivable were written off in December 2019.
Amounts due to related parties
As of September 30, 2020 and 2019, the Company had amount due to related parties as follows:
| September 30, | ||||||||
| 2020 | 2019 | |||||||
| Due to NHE | $ | 1,846,990 | $ | - | ||||
| Due to THF HK | 200,000 | - | ||||||
| Due to Rural | 79,942 | 79,942 | ||||||
| Others | 25,626 | 7,194 | ||||||
| Total | $ | 2,152,558 | $ | 87,136 | ||||
Amounts due to related parties were non-interest bearing and payable on demand. The amounts were used to support its operation and to acquire the exclusive license for registering and commercializing PhotosoftTM technology.
Director Independence
Our board of directors has determined that we do not have a board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
| 15 |
Our Common Stock is traded on the OTCQB under the symbol “RAYT”. The OTC Bulletin Board electronic trading platform does not maintain any standards regarding the “independence” of the directors for our Board and we do not believe we are subject to the requirements of any national securities exchange or an inter-dealer quotation system with respect to the need to have any and/or a majority of our directors be independent.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Total Asia Associates Plt was our independent auditor for the fiscal years ended September 30, 2019 and JP Centurion & Partners Plt is our current independent auditor for the fiscal year ended on September 30, 2020.
The following table shows the fees paid or accrued by us for the audit and other services provided by, Total Asia Associates Pl and JP Centurion & Partners Plt, our auditors for fiscal years ended September 30, 2020 and 2019, respectively.
| 2020 | 2019 | |||||||
| Audit Fees (i) | $ | 12,500 | 11,000 | |||||
| Audit-Related Fees (ii) | - | |||||||
| Tax Fees (iii) | $ | |||||||
| All Other Fees (iv) | - | |||||||
| Total | $ | 12,500 | $ | 11,000 | ||||
As defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “audit fees;” (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”
Under applicable SEC rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditors in order to ensure that they do not impair the auditors’ independence. The SEC’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent auditors. Until such time as we have an Audit Committee in place, the Board of Directors will pre-approve the audit and non-audit services performed by the independent auditors.
Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent auditors to us or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following documents are exhibits to this report.
| 16 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| RAYONT INC. | ||
| Date: December 18, 2020 | By: | /s/ Marshini Thulkanam |
| Marshini Thulkanam | ||
| President and Chief Executive Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Marshini Thulkanam, | Principal Executive Officer & Principal | |||
| Marshini Thulkanam | Accounting Officer & Director | December 18, 2020 |
| 17 |
EXHIBIT INDEX
| 18 |